Mr O'KEEFE(9.20 p.m.) —The timing of this is all quite exquisite. After spending nine months talking about Labor's black hole, the opposition folk suddenly find they have got what we are choosing to call the Costello crater. I might say that, when you have got a novice in the chair, as you will come to understand, Treasury never gives up. I remember not very long ago, when this legislation was introduced and discussed in its first form, that there were announcements between the government and the mining industry and much was made of the consultations that had taken place and of the agreement that had been reached that this legislation was going to be simply tightening up loopholes within the industry. But of course what we find, now that the amendments have come back, is that it has gone considerably further.

I understand that there have been discussions between representatives of the mining industry, the government and Customs officers about the effects of some of these redefinitions, and they are hopeful that they are being listened to. I would not hold out too much hope that they are being listened to because I think what is being flushed out here is a deeper agenda.

When the government announced the tightening up of the diesel fuel rebate scheme, it costed the savings to budget at $441 million over four years. But the explanatory memorandum now proposes a financial impact of $60 million per annum—that is, $240 million over four years—and, in addition, it refers to an extra $100 million saving of additional outlays relating to the AAT and Federal Court decisions.

If all this is added in, the saving is $640 million over four years. That is considerably greater than the assurances given to the industry last year. If those figures are correct—they come from the government's own estimates—then I wonder whether the government have any idea at all what the savings really are. If they do, then they have slipped this through the very people who have been quite close to them. This is a case of good friends being ratted on. They are taking it pretty hard, too, I might say. They have not only slipped it through but also added another 30 million bucks worth via some redefinitions in these new proposals.

I said that I think there is a deeper motive at work here. In January, during what they call the silly season—maybe it was a silly statement—the Minister for Primary Industries and Energy (Mr Anderson) let out a press comment which gave us some focus on the direction of this government towards the priorities in commodities and primary industry. His comments were that Australia should focus more on improving its exports of raw materials than on developing processing industries. For that, read `downstream processing, value adding, extra jobs'. Minister Anderson said:

It is likely that improving the quality of our raw materials will become much more important than value adding.

Where, in this little piece of legislation, is the extra bit of revenue being dug out? It is in the changes to a process, which they have dreamed up, called `beneficiation'. Put in layman's terms, it is where you use diesel fuel as part of the heating and energy process in doing a bit of downstream processing somewhere between the end of the line and the start of the line where the raw material has been extracted.

Some examples in the mining process which are closer to the mined and extracted end than the final marketable commodity, such as a slab of processed steel, for instance, are processes such as roasting, sintering, smelting, calcining and leaching. It applies right across the mineral sands, gold and coal industries. They have these integrated processes that are part of taking the raw extracted product—you understand this well, Mr Deputy Speaker Adams, because of the work that takes place in your electorate—and preparing it for the phase of refining and downstream processing. Admittedly, it is further than the stage where you dig it up, stick it in a boat and sell it as a raw product. It actually involves the part of the process that starts to create a few extra jobs. I go back to the minister's comment. He said:

It is likely that improving the quality of our raw materials will become much more important than value adding.

What on earth is wrong with these people? We have just been through the traumas, as a nation, of transposing ourselves from being `chop it down, dig it up, send it off in ships' people to actually trying to add a bit of value in the nation. Now they are turning back. More importantly, this legislation exactly reflects that trend.

While we are committed to not opposing the legislation as it goes through this House because that is the undertaking we have given, I am making it very clear to the parliamentary secretary and the minister at the table, the Minister for Small Business and Consumer Affairs (Mr Prosser)—I hope he will pass these views on to the minister—that if ratting on the agreements you made last October with the mining industry is unintended, then you have the opportunity in the phase in the other house to take account of the amendments that have been proposed to you and that are under discussion at the moment by representatives of the mining industry. This is where they will find out whether they have been ratted on or whether it is an unintended consequence that can be finetuned. My view of it is that they should not hold out their hopes.

I am making it very clear that, although we on this side of the House will not be voting against the legislation in this phase, we will be indicating in the other place that we expect these amendments to be picked up. It is not solely around the points I have already made. There are some other signals now coming in about investment trends in the Australian economy that roll, in part, off these sorts of issues. Nobody in either agriculture or farming expected that the diesel fuel rebate would turn up on the budget table again. They had been through many years of seeing it examined. Successive Labor governments had maintained the diesel fuel rebate, in the face of considerable pressure from Treasury, as an obvious cost saving measure.

When many in these industries supported the coalition at the last election, the last thing they expected was that their diesel fuel rebate would turn up on the table. They made their way through it, but they did not expect it to turn around and bite them again they way it is now.

The member for Wakefield (Mr Andrew) touched on the issue of farmers not needing to have any concern. For heaven's sake, the miners were told last October: `This is as far as we intend to go.' Now, by January, which is just a quiet three months later, we have already slipped another $30 million worth in, including the vehicles under 3.5 tonnes. Farmers of course can do little else but stare at the media about the Costello crater. They know that there are going to be more budget cuts from this government because they got it so wrong and, no matter what assurances they get, they are going to have to seriously expect that the case for 3.5-tonne or less vehicles out on remote mine sites is absolutely no different from the use of vehicles in that weight category, whether they are spraying equipment or four-wheel-drives driving around the farm, when it comes to farming or mining.

I think those members, particularly of the National Party, who are sometimes described as Liberals in sheep's clothing will be much better defined as sheep in Liberal clothing by the time this particular issue sees its way through. Those people would want to be looking very closely after the interests of their constituents, because this is very much on the table. There is no way it could not be.

There is one other aspect of this that I want to touch upon. Some figures released yesterday from the Bureau of Statistics show that the mining and exploration industry has increased its investment in offshore exploration—I do not mean off the Australian coast; I mean exploration in other countries vis-a-vis exploration in Australia—by 13 per cent in the last 12 months. When you ask the industry why they have taken that investment offshore, they tell you that a number of factors taking place in Australia are causing them to be less certain than they were when they were investing their heads off in exploration and development under Labor.

One of those comments that they make, and one of the key factors they give, is the now intense confusion, uncertainty and distrust over the diesel fuel rebate because many of these companies are actually now anticipating a substantial increase in energy costs. As those familiar with these industries know, energy costs, particularly if diesel fuel is your only form of energy, are significant in the make or break of the exploration or what it might lead to.

This government, which runs around boasting about low inflation and low interest rates—in a country that ought to be comfortable and ready to invest its head off—wants to have a good hard look at what it has created in just 12 months in this industry: a 13 per cent increase or drift offshore to other countries of investment capital in this industry for these reasons, and the government knows it. The industry has told it, but it does not have any answers for the industry.

The government are sitting there with this Treasury driven budget process. We have been through it; we know what it is all about. We know how relentless it is. As I said, when you have a novice, he is easy bait. That is what has happened here. You have an industry that has been a very strong supporter of the coalition government now in deep despair about the fact that it is being turned on and in such an untrustful way.

I make those few points to make it clear to the Minister for Small Business and Consumer Affairs (Mr Prosser) and the Parliamentary Secretary to the Minister for Employment, Education, Training and Youth Affairs (Mr Abbott), who are at the table, that we will be not opposing the passing of this legislation. But, as has already been pointed out by my colleagues the member for Hotham (Mr Crean) and the member for Hunter (Mr Fitzgibbon), we have severe reservations about what has developed in these three months since the original announcements in October. We expect in particular that the proposals being requested by the industry will be considered in the Senate phase. We will be reconsidering our position in the Senate phase if that does not come to pass.